good morning. welcome to "squawk box." i'm becky quick along with joe kernen. andrew ross sorkin is on assignment. joe told you it is jobs friday, so let's get right to the expectations. forecasters who were polled by dow jones, they say the economy likely added 118,000 jobs last month. the unemployment rate according to the dow jones poll is seen holding steady at 8.1%. reuters consensus is calling for 113,000 jobs and the unemployment rate of 8.2%. meanwhile ap using 113,000 jobs and a jobless rate of 8.2%. that would make that 111,000 for the ap. well have complete coverage of today's reports. we have a trio of experts who are standing by to join us in just a few minutes. michel

michelle girard. and in the next hour, jared bernstein and tony fratto. our guest host this morning is fx concepts chairman john taylor. after we hear the number at 8:30 eastern time, we'll talk about what the news means for the obama and romney campaigns. our ges both served as chairman of the economic advisers. austan goolsbee and ed lazear under president obama. but first this morning's headlines.

you wanted music but you didn't pick this? >> no but it didn't bother me until you started mocking it. >> she want us just to talk, no music. >> let's get to spain and its finance minister. sparking laughter from an audience in london today, why he told a group of academics that his country doesn't need a bailout at all.

that's interesting. the minister is arguing that madrid's reform program right now is already sufficient to stave off a full sovereign bailout and the ecb's bond buying program would suffice. to help spain recover. that's apparently how it started, with -- you can imagine -- that's bad for confidence of the minister of spain where he's telling an audience, we don't need a bailout and then you hear a whole auditorium laughing. morgan stanley is warning that more pay cuts are coming. in an interview with the ftc, james gore man said more job cuts and smaller bonuses are planned next year as the bank attempts to boost shareholder returns. i'm handing this back to you. you deal with it. this is your idea. >> this is how we do it. we'll pretend, we'll play along, in corporate news, sony is

halting sales of it experian tablet a month after its launch. there are gaps between the screen and the case and makes it susceptible to water damage. >> facebook had requested the transfer, investors argue that they lost money due to nasdaq's it technical glitches and they're accusing facebook of selectively disclosing unflattering information to analysts who then shared it with privileged investors. and federal and state authorities are reportedly investigating credit suisse over mortgage backed securities sold by the bank. a civil fraud case was file order monday over mortgage backed securities originated and sold by bear stearns. >> but they're all bad. and they're unsettling. and if i'm getting all this bad news, i'd almost rather have

some calming sort of -- >> zen music? all right. let's play some zen for joe. zynga is slashing it full year outlook for a second time. the company blaming the poor performance of its live internet games and the write-off of an acquisition. zynga has lost three quarters of its market value since going public back in december. this has been a huge mess. time and time again, people leaving its games that have been so popular. a lot of questions about that. pre-market, down 19%. >> every day we've read this same headline here. american airlines scrambling on fix the seats. i heard over 50 flights have been canceled. the airline has come up with a fix and has begun pulling planes out of service to make repairs. work will be done by tomorrow, but again, not great timing for american airlines, in bankruptcy, trying to avoid a it takeover. p. >> a story you definitely gont

wa you don't want that music playing, the scary music. >> why don't we get a poll from our voter. you can either -- a >> viewers. >>erviewers. twitter or squawk e-mail box. >> do you like the calming music or the unsettling music. >> or no music. go ahead and vote. or ticker tape. a, b, c or d. ticker tape music is this. scary music is is the bell. >> this is scary. unsettling. this is just -- because news normally is scary and unsettling. so this is calming.

>> let's take a look at the markets. the big question obviously will be 8:30, just under 2 1/2 hours away. 8:30 is when we get that jobs number. until then, the markets are hanging in, up about 13 points for the dow futures. nasdaq also indicated higher. we did see big gains yesterday. dow up 80 points after bouncing all over the place. in europe today, my guess is that they are also kind of waiting to see what happens here in the united states with these numbers. do you have that news coming from the spanish finance minister. at this point, the ftse, france, german dax all indicated up by less than 1%. in asia overnight again, this is the last day that the chinese markets are closed for that one day holiday that lasted a week. right now the nikkei closed up by about 31 points. sensex down by close to 140

points. oil prices up by another $12.84. so back at $90.98. an awful lot of volatility. ten year note yielding 1.679%, that yield creeping slightly higher. the dollar if we take a look, you'll see it is up again the euro. it's up against the swiss franc, down against the yen, but the euro trading at 1.30. so first time i've seen above 1.30 in quite a while 37 gold price which is have been climbing ever higher, to this point just down slightly. $1791.60. >> william congry, died 1729, a play wright from england, wrote probably his most famous -- one of his most famous plays, the mourning bride. 1697. music has charmed to sooth a savage breast. the first line of the play.

it is always misquoted as beast. and the has appeared as hath. time for the global markets report. today fittingly is global james bond day. the 50th anniversary of the world premiere of the first james bond film. dr. no. and oo ross westgate is trying his hand at bond this morning. that was receipt cool animation. you should see our chairs animation where we look like

three dweebs walking around. that was at least good. oh, look at that. do you have a monitor? we have you in the -- >> eye. >> wow. >> thank you, m, for that. i will try and proceed with my mission. i'm here to tell you where european markets are. >> it's all green. now i see a little red. why are you happy today, what's happening? is it because it's the beginning of baseball season over here? i mean of the playoffs. >> naturally. you know that gets a the lot of focus here. >> if the bat isn't flat and the game totally not understandable that lasts 15 hours, do you have any interest in it over here? >> there's always a winner, right, in baseball. you don't get any draws, do you, which is a little confusing to us. >> i can't believe that you

would ever compare that game, what is it, cricket? you wouldn't compare that to baseball. i'm trying to get you to do that so you look silly on james bond day. >> no, no, we're okay. we are at the best sessions, joe, maybe because it's 50 years since the launch of dr. no. and despite the spanish finance minister being snickered at yesterday, i'm not sure the last time he had a bit of a snicker, but it did happen. and i think we have to understand there's a difference between spanish politicians talk between a bailout which is sort of the thing that greece, ireland and portugal got and what they think they're asking for, which is a condition light assistance. they would argue there are two sort of distinct things. we also heard more today on that as reuters report suggesting how the ecb if it ever does get under way, that they would buy heavily for one to two months

and then they would necessarily pause for a month and see if the country could access the markets. so we have this theory that held come in heavily and then see how are you getting on. we know of course the ecb is very much in the comments saying it's down to the governments. they have to fulfill their requirements. so here we are at the best levels of the day, as well, and indeed euro-dollar is up above 1.50. and spanish bond yields, still just below 6%. italian yields fairly contained, as well. so it's all about the employment report today which leaves -- somebody has mysteriously left what looks like a martini glass. i'll come back into the light. shaken, not stirred. >> man, does he look the part.

>> yes, you do. i wonder who could be messing with your lights. thrush? no, not spectrum, spec ter mayb. it was mostly just the russian, right? >> and i remember the later ones more. >> i see oo 7 at the u.s. open tennis all the time. that's where sean connery hangs out.7 at the u.s. open tennis all the time. that's where sean connery hangs out. looks like we're going down a drain. the show has been going down the drain. that's a good pose there. shaken not stirred. thank you, ross. we'll see you later. have a great weekend. if you have satellite tv, could you probably get the reds game maybe. >> maybe. >> we are in count down mode this morning. jobs report due out at 8:30

eastern. we are joined this morning by michelle girard. you have about eight names. people remember your face. we've made you famous. get recognized once in a while? >> sometimes. >> and we have it other guy who gets recognized for his ties. fao chief economist and federated investor chief equity market strategy phil orlando. how are you? >> i'm fine. >> we've been going on for 20 years i think. >> feels like that. >> what's your number today? >> 120. we were discussing it earlier. we're very close to consensus. there isn't a lot that suggests the labor market has changed very much and that's why we're all with the recent trend. >> my forecast 120 for the jobs and participation rate somewhere around 42%.

which should bring the unemployment rate down to about 5. are you looking for 5? >> the participation rate at the start -- >> 42% seasonal factors. election factors. >> demographics. don't forget, we have the baby boomer age which is actually a true factor. >> are you forecasting 5.9? >> probably not. >> i bet you we get 7.9, don't you think? >> today? >> eventually, yeah, but not today. >> is that a conspiracy theory? >> exactly what it is. we're at 8.1. >> is this obama metrics? a special gauge for the metrics? >> phil, you're talking hundreds of thousands of jobs where you finally get down to this net number and then you got all these other assumptions that go into the participation rate. and there must be 100

assumptionses th s thathat go i. >> you're sitting with a 30 year low. you could easily throw another couple hundred thousand discouraged workers in there and bring the number under eight. the metrics that we look at, in the post war era, no president's ever won re-election with it under 7.3. so there's no way we're getting down to 7.3 in the next month. >> it's following what we now call the great recession, whether that's accurate or not, and that makes it different this time because it's a lot of people still say -- you heard bill clinton, he put it in -- it's almost emblazoned now. >> four years ago, it deid feel different. >> now we are hearing that no one could have done better in job growth and that perception was supposedly different. we had people come in here that were thinking '80 was even

worse. >> the new standard. we failed so this is good. >> the one thing that is helping the president is the rebound in home prices and the fact that i think -- because actually consumer sentiment is on the rise in the last couple of months. and i think a lot of that is that people are reading that home prices are getting better, they feel there's a turn in that market. and i think that's playing it, as well. the unemployment rate is still stubbornly high, but people don't feel all that bad and i think that's one of the reasons the stock market is doing well. >> the question is how many people are participating. >> front page article in the journal this morning is that despite the fact that we're sitting at a four year cycle high, we're up 120% from the bottom, you've still got net outflows in the equity market over the course of the last year. now, our firm is one of the few firms that have actually seen slightly positive net equity flows, but most of our friends at the other firms are telling us the money has moved out.

>> 1.36 billion or something moved out. >> yeah. >> one important person who is still participating in the stock market. bald. has a lot of influence at the central bank. came from down south. expert on the depression. >> yes. >> as long as bernanke is participating in the stock market, it will go up. >> you don't want to fight the fed. >> interesting thing about that story is that you have the story about the stock market, how well it's doing, how people are exiting. and the fed chairman is out there with the short skirt and pom-poms waving for people to get in. >> you have to be stupid, right? 40 billion a month? it flows downhill. why would it flow into 0% stuff when you have 4% yielders. >> a large part what he's trying to do is create this wealth pact. why do do you want to get in front of the train. just ride the wave. >> he's pushing people out the risk curve.

you haven't seen consumer mortgage ratings come down, but in the marketplace, again, people are just not able -- they're doing to the mortgage market what they did to the treasury market. they're moving in to other products. and truthfully, too, it's pushed people also helped the real estate market, as well, because don't forget, a lot of people in the low interest rate environment, investors are looking and buying up a lot of these homes, looking at that as a way to get yield in here. so not only is it helping stock, it's helping the housing market and that's that wealth effect people are talking about. these are the two areas bernanke knows are vital to how people feel and the confidence factor. >> but this is cart before the horse economics. the stock market is supposed to go up because the economy is going up. and when you push the stock market up artificially and hope the economy will come behind it, i think that's very dangerous. i'm very uncomfortable where that. i liked the stock market more before i saw the fed in there as

a cheerleader. when the fed's doing something you kind of have to look at the other side of risk and now i'm getting worried that the fed is doing this. >> you could careless why it's going up. >> from a valuation standpoint, we're certainly getting ac litte stretched. 14 1450 was our number and we're essentially there. you look at the economy, housing is certainly working. autos is search working. consumer has come back. the piece that's concerning right now is manufacturing is in the dumps. that's probably not going to pick up until we see some improvement in the eurozone situation or emerging market growth because that's impacting for the end market demand for a lot of our exporters. so everything is not cranking. there are still pieces of the economy that are disconcerting. >> what's your number today? >> i'm looking for a headline of 150. >> and then the rate, you don't -- >> 8.1. >> just stay where it is. >> yeah. >> you don't think participation rate comes down?

>> well, it could. it's very hard to predict that one. i try to understand why it's doing what it's doing. but you have a lot of different trends. you have the male trend, female trend and the teenage trend. the female participation rate has stopped its structural ride. the male rate has been following since the 1950s. so there are things in this report that in the participation rate that are some long trends and then there are these new structural trends, the baby boomers, and so i think we can understand things that are going on and why the number is different, but it's still disconcerting. because to me it's the jobs number that are disconcerting. >> to keep going down and down and down -- so females are staying, men are -- are they killing us off still, is that continuing to happen?

it's a fact. >> arsenic. >> the bigger story is the fact that aging -- >> you're look right at me. >> you are soon going to be in the low participation rate age. but as more people are moving into the category that the 18% participation rate -- >> tell him. >> i'll talk to him. >> you can talk to me. thank you all very much. we appreciate it. always good to have everybody in studio like this. when we come back, we'll talk more about your friday morning sports report and the weekend weather forecast. [ male announcer ] at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade,

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it is time for your daily squawk sports report. let's start off with baseball and a new playoff format. two wild card match-up, st. louis at atlanta and baltimore at texas. they'll decide which teams advance to the next round. thursday night, rams ending the cardinals unbeaten run. 17-3. the rams totally nine sacks, their most since 1998. >> no. >> yes. a big shout out to the rutgers scarlet knights. it is blackout day at the stadium. everybody in attendance is expected to be wearing black

including the team. they have new black jerseys that are out there. big game. rutgers 4-0, ranked in the top 25 since the first time in 2009. speaking about rutgers big win at arkansas, first year head coach says he's proud of the football team and now the challenge to take the success that we've had to build on that -- >> you're quoting -- you have that long quote from the first year coach, too, just because you went to rutgers? >> yes. and i'm wearing black today in honor of the scarlet knights. >> unbelievable. >> let's get to the weather forecast forecast. alex wallwallace, i'm sure he's fan, too. >> can't say that. bulldogs are my team. >> that's okay.

>> all right. east coast looks like we'll be pretty good here for our friday, enjoying dry skies. it's back across the eastern lakes and into the midwest where we to have a bit of rain to contend with. snow still going on across the northern portions of the upper midwest. light snow in those areas and then we head to the west coast where all is looking perfect. vak are a men toe, 77, seattle right around 70 with sunshine. squawk will be right back in a bit. international air transport association expects global profits to reach $7.5 billion next year. that's more than a 50% increase over this year. but even with these promising projections, 2013 profits will still lag behind the $8.4 billion airlines made in 2011. iata cites the economic mess in europe, oil prices and doubts about the global economic recovery. for a break down of how airlines are doing by region, check out roadwarrior.cnbc.com.

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saw todd's on later today. didn't go to miami, but from -- >> he worked down there, i think. >> he is on the wrong side.

>> yeah. he'll be on at 7:30, right? >> yeah. >> good morning. and welcome back to "squawk b " box." jobs report, expectations are all over the map. forecasters saying 118,000 jobs. unemployment rate holding steady at 8.1%. roit reuters looking for 113,000. they're looking for a rise to 8.2%. ap using 11,000. >> pretty tight range. joining us to talk about the importance of the1,000. >> pretty tight range. joining us to talk about the importance of the data, furs

jared bernstein and also tony fratto. gentlemen, welcome. how important is this number? is this the most important number or is it the number that voters get just a couple days before they walk into the election booth? >> at that point if you're not pretty much locked down, i don't think any particular number will change your mind unless it's wildly off the kind of averages we've been seeing. and a strong number today would obviously change the conversation a bit. so i know thatle folks will be watching it very closely. my expectation is pot that different from the ones you were just showing. you get a sense w450i8 the adp was kind of strong, it came down from last honesty. month.

about 20,000 less in september than october. unemployment claims have been volatile volatile. ism gave you a little hope on the manufacturing side. so i think probably the consensus is about right. >> i know it's crazy to look at a number that is a lot of times revised down the road. >> jobs created number is a tough number to consume. it affects how we react. so the new it is ths that ameri from us and market watchers who react to it, they pay attention to the jobs created number. it will go down through a lot of revisions and definitely a down message last month. but the rate is really interesting because there's some

noise around there. i did disagree with jared on one thing. we said the claims number has been volatile. it's actually been elevated at a fairly high level at around 375,000 a month. it's not consistent with high job growth. i joke a little bit that unpacking my adjective for the jobs report that we have run out of words to describe it. words like tepid and lackluster. ho-hum. we're running out of words to use to describe a number that is right around that range. it's not high enough to bring down the unemployment rate. if we get consensus again, we're right back where we are, which is not a great story for the administration to tell and still some traction for the challenger governor romney to talk about about. >> national journal had an

interesting article out called defying grat ifvity. the poll numbers for the president are certainly not particularly consistent with the kind of statistics that tony just accurately described. so in a way we put a lot more emphasis on these numbers and month to month results that the president will somehow doing better than that. and i think a lot has to do with momentum. so as long as he's posting a positive number on jobs that's at least north the of 100, whic last month wasn't -- >> i talked about that earlier. he gets a pass on what he inherited and what he didn't. are you playing paul ryan with have not -- because i hope it's not going to be in a high altitude -- i don't know whether vice president biden is also affected fwhi thin air, but hopefully you've got it at a sea

level place. apparently tony, romney was training in the mountains around boulder and he had all his blood cells -- >> one of the funniest things i ever saw. >> the altitude affects romney differently. i think he breathes a little more. >> he's taller. >> maybe he trained for the debate in denver. right some remember max company city? >> i'm glad you're entertaining yourself. >> all preparation that matters, right? >> it is. jarrett, what do you think, are people underestimating the vice president's abilities with paul ryan? >> if they aren't, they shouldn't. he's quick on his feet. he's good at linking things to a narrative. i can't imagine he would want to go into the weeds with paul ryan and talk about budget baselines. he'll talk about the kind of narrative, the middle class, the folks that he believes --

>> the ones buried in the last four years? >> i think joe biden really does connect with average voters in a way most politicians don't. and i think it will be tough. >> tony, you and the steelers, man. anything happens to them, and i got to hear from you. >> i have not had a chance on air to congratulate you with the reds. amazing season. >> thank you. they're 5:1 odds. i think the nationalses are slightly above that. but i checked the game is saturday 8:38. i'm so excited because last time i got to the playoffs, remember what happened? they got no hit. i'm like watching it, waiting for a hit. i waited and waited and there never was one. anyway, gentlemen -- go ahead. >> what's that, football? >> listen to you. >> i know you'll have chuck todd on later today, but on this question, if you look at like

some of the expectations from the wall street journal poll, on the feelings about the economy and the jobs numbers, what we're seeing in that poll, and i'd love to get chuck's thoughts on this, is a break down in the way republicans and democrats think about the economy. where you see it almost all on the democratic side an improving economy that's discording with what the fed sees and what the other people see. i'd love to hear chuck on that. >> we'll bring it up. thank you, jared, thank you, tony. >> kind of on the topic of politics, hospital stocks took a big hit yesterday after mitt romney's strong performance in wednesday night's presidential debate. i looked at a couple. author of the book health care investing, he were of currently fund manager at a investing company with a focus on health

care. >> yeah. >> they did come back by the end of the session yesterday to some extent. what was the rationale that if romney gets in, obama care goes, so people will go back to the emergency room where the -- someone pays for it, but the hospitals get hurt anyway. >> right. simplistic trader thing. obama loses, obamacare goes away, 30 million all show up at the hospital and don't pay the bills. >> and the hospitals, they're results over thes past 0 years have been negatively impacted so-tsto what extent? >> it's changed over time. it's gotten worse as people have had to pay more of their insurance bills, but something like 1300, 1400 basis points of

uncompensated care. >> we know that -- what is the percentage before obamacare of people covered in the u.s.? is it 80% by some insurance? >> it's been going down since way before obama. since late '80s. >> in terms of health care inflation, what percentage is caused by the group of people that are uninsured and go to the emergency room? >> relatively shawl. i don small. a lot ft of inflation, 5% of pee are -- >>s it is a small part of health care inflation. so when we hear the reaction nael that something had to be done because there would be exorbitant increases because we're all paying supposedly for the people that go to the emergency room, that's a -- that's not true. >> it's partially true.

unfortunate unfortunately, health care costs are a complicated issue. the current law doesn't do very much explicitly about health care costs. eventually somebody will have to reduce the volume of services or reduce the price of services. >> so what are you telling investors, buy hospital stocks, don't buy hospital stocks, by the good ones? how do the insurance companies fair? >> insurance companies win almost no matter what happens. so that's fine. >> there's medicaid advantage. >> right, medicaid, medicare. >> is there a head k medicaid advantage? >> medicaid hmos lose it if obamacare gets repealed because they're going to expand medicaid, as well. >> expand it greatly. and it's not block grants. a federal expansion. so what's your favorite stocks? >> my favorite stocks are the ones that are not that impacted by federal policy.

united health, intuitive surgical. genetic analysis companies do well. but not completely unrelated to reform. and you can always go outside the u.s., too, if you want. so i guess you're not moving to france if about obama wins. >> alec baldwin didn't move, i'm not moving. we say things when we're upset and then we don't really ---now, if babs moves, i might go with her. >> when we come back, the countdown to the jobs report. we'll be asking the man who runs bond investments for fidelity what the numbers could mean for the markets. monday, facebook and "squawk box" collide. quiche in touch with joe, becky and andrew. get updates and check with the anchors. interviews, news and upcoming events will be posted to our

page daily. like the show and stay connected. "squawk box" on facebook kicks off monday. smart comes with 8 airbags,23 a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety.

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joining us, bob brown, fidelity investment bond group. did you see the journal piece, investors jump off the junk pile, totally overheated. is that your view? >> the junk market has had a tremendous run this year. up over north of 12%. at the end of the day, i think investors are still looking for some level of income appreciation and the junk market is doing that. high yield companies have never been in better shape from a balance sheet perspective. and cash flows that they're providing. p so we continue to see the massive capital gains that we've seen or the run up in price

appreciation that we've seen this year. probably not, but i think it's still a diversification. >> what kind of current yield can you get on an average junk bond? what's average, bb or something? >> bb. you're going to -- right now investor grade index spread is at approximately 140 basis points. rallied from 241 basis points. >> so what could i get? what percent and then maybe hope for maybe a little capital appreciation, but hopefully no capital loss. what kind of yield can i get? >> high quality bb bond should be trading right around kind of the 4% to 5% to 6% range depending on the sector involved. >> you can almost get that in at&t or something like that can't you, and just common stock any guess there's more risk obviously. junk bonds aren't nearly as

attractive as they used to be. >> given significant appreciation they've had this year, i think you've seen a nice rally. >> would you buy any treasuries at all right now? >> treasuries have historically provided four functions for investors. one is income and you can still get that, but i take your point well. certainly muted. two is principal preservation. and three is diversification from other asset classes. the last one is a significant run up in price appreciation or capital gains. that will be more challenging in 2013. >> we'll check back with you in a couple weeks on all this stuff especially the junction stuk st. when we return, hugo chavez facing the toughest election of his 14 year rule. win or lose, michelle caruso-cabrera will have plays that u.s. investors are k. make money on. ♪

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welcome back. hugo chavez will face his toughest challenge this weekend since his rise to power. michelle caruso-cabrera joins us with the story. >> so it's a close election, which surprises everybody. it's probable that he wins but it's possible that he loses, which is pretty big news. venezuelan bonds have been moving dramatically as a result of what's -- they've been

actively traded. let's bring up the one-year chart and we can show you first of all they're actively traded because they have very high yields, one of the few places you can get high yields. if you're thinking this is a country that can get a lot of oil you can get 10% on venezuelan sovereign oil. huge rally, when people thought hugo chavez was dying, people were going to be more willing to invest, then the big drama with the european debt crisis which pushed all interest rates higher. we've seen it come down. if we were only going to show you a one-week chart which we can't because of the way our charting system works, things started to sell off because people are nervous about what happens this weekend. jpmorgan has done a breakdown of probabilities and possibilities and what would happen to the bonds as a result. they think that it's possible that the election is so contested that we see rioting in

the street next week. there's a 15% possibility of that, they think the bonds sell off dramatically. if however the opposition wins and he's allowed to take power, this 40-year-old guy caprilli, you have a massive rally in the bonds. they break down five possibilities. he wins, and he's allowed to take power. he wins, he's not allowed to take power. he wins, there's some constitutional breakdown, et cetera, chavez wins decidedly, he wins only by a little bit. >> is he like a regular like a capitalist or is he -- >> caprilles, yes. he's run on reinvesting in the oil company which chavez hasn't done. he's looted it for all of his social programs which haven't been effective and they've seen declines in production. >> is this guy running on taking back some of the things that people are getting done?

we have the same election here. is he a candidate saying you're not going to get as much as you were getting? >> except if you've lived under a guy for 14 years and didn't get what you promised you'd get, a brand new house, water running to your brand new house, paved roads, et cetera, et cetera. so you're going to vote for the guy who said he's going to give you all the stuff but hasn't? >> paved roads are good. >> especially if you've been pumping oil for decades and kads. >> people in cambridge, massachusetts w robert f. kennedy. >> it's unbelievable, he's not joking, hugo chavez gives one of the counties. so there is a high beta trade but a lot of people own the bonds because they've got high yield. >> thanks, michelle. >> see you later. coming up, september jobs reports is 0 minutes away. we have john taylor to join the conversation next.

so can we get back to work, please? we're counting down to a critical employment report. fx concepts and john taylor on where he thinks the numbers will come in and what it means for your investments. martin o'malley, maryland governor, on what his state is doing to generate jobs. the second hour of "squawk box" begins right now. welcome back to "squawk box." i'm standing up, so pay

attention. i'm joe -- i'm joe kernen, along with -- >> crank, crank, crank. >> i'm joe kernen along with becky quick. here's a look at today's line-up. john taylor joins us as guest host, bottom of the hour, nbc's political director chuck todd will talk politics and a little bit about that big game that nbc is carrying on saturday against the hurricanes and the fighting irish. and at 7:40 eastern, president obama surrogate maryland governor martin o'malley, big, big political future for this gentleman joins us on the quest to create jobs in america. look at that guy. he looks like a guy of the big future. at 8:30 eastern the all important jobs number is out. steve liesman, to get on tv he'll do anything, he stands up whenever we ask him to. he gives us a preview in a

minute. you got your mikes on? >> i have my mikes on. >> and after the wall market reaction. >> you won't stand up. >> i will not. the economy and your money, ed lazear and austan goolsbee. i'm glad we got ed to match up with austan. in the past we just have austan. we'll get to becky who gets to sit, with the morning headlines. comfortable over there in. >> it's very comfy. your my partner and in solidarity i'll stand for you, joe, ready, just for you. good morning, everyone, we've been watching the futures and they are slightly higher ahead of the big number we've been waiting for. dow futures up by 21 points, s&p futures up by two points. everything is waiting for 8:30 when we get that jobs report. let answer get to some of your morning headlines. morgan stanley is planning to cut more jobs and slash bonuses. the ceo james gorman tells "the

financial times" those are necessary to improve value. he is sympathetic the industry is overpaid. samsung is reporting a record quarterly profit of $7.3 billion, nearly double the figure last year. they expect the current quarter to be more difficult as samsung spends more on marketing and escalating competition from apple. american airlines says the jets they pulled from service should be back in service tomorrow. they pulled 48 to inspect and make repairs to loose seats. several flights made emergency landings because of the loose seat problem, something they're trying to get fixed quickly. steve. or joe? >> he's standing for a second segment. does your contract say no standing? >> we're at the agent after the show, he's on my speed dialer.

today's job report, major implications for the presidential race, senior economics reporter -- >> you can't walk and read. do it again, start back here. senior economics reporter -- >> bob pisani -- you're not going to walk. that's not in the contract. >> what do you want to talk about? >> i want to talk about the most important number for the federal reserve and political debate going on now, it's 23 million. you know number, 23 million. >> i do, u6. >> the u6, we'll break it down so that everybody understands what we're talking about and how to think about it politically. >> steve, are there people that are working one hour a week -- >> yes. >> -- that are employed? >> i'll give you the definitions. i want to you go back, sit down, relax, get a pencil out, take some notes. so you'll never miss any of this.

>> i'm working a solid 15 a week. >> you're in just before and out right away. you would count. what's interesting is you would both be employed -- >> 15 hours a day. >> you're marginally attached but that's another story. >> can i go? >> that would be a more mental thing than physical thing. >> can i go? >> you can go. get out of here. wait, there's a chair. you stay right there. all right, let's go through the numbers. greco in the back is freaking out on time. august unemployment rate 8.1, joe was convinced there was a conspiracy it would be brought down to 7.9. >> 5.9. >> excellent, and the september adp. very few, i can't say nobody, really changed this number here because of this number. they practically ignored it. let's look at two gauges of the lackluster recovery or jobs recovery we've had. joe, two line charts. >> got it. >> the unemployment rate, the

number that's 8.1, the bottom. and this is the top one here, the u6, broader measure of slack. two things -- guys, go back, they're hurrying. oh, beautiful. they got this big gap between the two, what does that tell you? a ton of extra slack beyond the unemployment rate. also watch them move together so from an investment standpoint what that's telling you is there's no new information. don't look here to find out where that's going to go and they're really moving together but in terms of the fed when they say inflation is going to stay low this is a big part of what they see, this massive slack. look at how we get from the unemployed to the underemployed. >> i'm blocking people out. i can't see now. >> it's down 1.3 million, marginally attached 14.

he's got a ride swathe so you're unemployed if you have no job and looked for work in the last four weeks, then you're unemployed. you're marginally attached if you want a job and looked for work in the past year. you're part-time for economic reasons if your hours were reduced or you want a full time job. let's look at these things. 8 million here, 756 down. this looks good, right, there's your 23 million people. those three components make up the 23 million. that looks good. not so good when we look at a broader perspective. real quickly we'll go through this and can we get to the next chart? becan. come around here, kernen, all the way around. here's where we were in october '09, come down to 14.7% but this is the 15-year ample. let answer put numbers up into the next picture. we're 2.5 below october '09, the

peak but 4.3 still above the 15-year average. come over here to the unemployment rate, same thing, down 1.9 and 2.2 above. joe here is what i think is interesting, this is a real good sign of the new normal. this is the 15-year average of the unemployment rate, 5.9% but we've had five years or a huge amount of time above eight so what does that do to the average on a 15-year, it raises it. you would come down if you x'd out the five years the more normal rate would be 4.9%. what is the right gap here? the problem is worse than it appears even looking at the chart. >> bush/clinton you can get the number and it's 5.3. >> 5.3 or 4.9, if you take out this recession. you don't want to take it all out, maybe take out the magnitude of it. where we need to go back to is a debate for the fed and the markets as well.

>> i wish you had a participation rate that was adjusted for demos and just so we could compare apples and apples. >> i'm working on that. the trouble is, joe, it's hard to work with government data. it's really become -- >> not that hard. watch what they're able to do today. >> i've been working on this. i'm trying to find how much of this is old folks retiring, seniors -- old folks is the wrong word these days and kids dropping out going to school. there's a piece of each one. >> i wish we could have that standardized number for what the participation rate is in, i don't know what normal is, and so then we could figure out exactly where we are and what it feels like to people. because if we went back to the participation rate where we were five years ago we're at 11%, what it feels like. >> you don't have to really know that number. you see our all-america survey. only 10% of the economy say it's

excellent. >> can i stand up so people can see -- >> how much taller you are and how much more hair you have? do we count the three inches we have from pumping it up? it makes you 6'5", so the five inch edition. >> i get the thick one. do you remember john taylor, was it a year ago, becky, when he said we were going -- >> i don't think it was that long, 10, 11 months ago. . >> the recession where it's back-to-back, that's the only definition, which you pointed out that is not the definition. you wonder whether he could claim victory, that we really have been in a weak enough period where he was right about the general, the overall feeling of what would happen in the economy because it's lousy. >> there's nobody -- when you have numbers like that, think about it. as you said, one hour you're part-time for economic reasons. i want a full time job or my hours were cut from the job that i had. that's a huge cohort. other people said i want a job

and i've only looked a little bit in the past 12 months. that's a huge cohort. then there's the 13 million normal cohort we have tremendous slack, that makes the fed optimistic or sanguine or not worried about the inflation problem. >> romney said someone talked to him, had four jobs in the past six months but didn't want any that he had. >> if they worked in the past four weeks they would not be unemployed. in the survey. >> john taylor has a lot of money under management, currency expert, knows about gold, been in the markets more than 30 years we'll have his take on emerging markets, europe, the u.s. economy and he's going to be standing with me next. >> i'm not sitting, i'm standing. "squawk" will be right back. >> comments, questions? send them to @squawkcnbc on twitter, follow the show and look for updates from andrew, becky, joe and the "squawk"

staff. "squawk box" on cnbc, and on twitter. ...what should we invest in? maybe new buildings? what about updated equipment? they can help, but recent research shows... ...nothing transforms schools like investing in advanced teacher education. let's build a strong foundation. let's invest in our teachers so they can inspire our students. let's solve this.

check the futures ahead of the big jobs number staying close to 13,500 today, futures up about 19 points and that's for once you just see the futures and that's the number because the fair value is

basically at zero. our guest host is a squawk master and one of the leading authorities when it comes to currencies. don't mind us. we're just trying to do a lot. joining us is john taylor, of fx concepts. there's another john taylor one of our guests. >> he was one year behind me in college. >> no kidding. >> yeah, amazing. >> you're both great and cover things completely differently, but i crave information from both of you. so life is going quickly because i thought it was like a year ago when you said we're going back into close to a recession. that was 18 months ago. we did slow down, that was the spring when we had the first time and it got a little bit better and another spring swoon and i've been defending you saying that this is not much of a recovery, so to say it's a recession, you could argue philosophically that you were right, that it never really did. if this is a recovery, it's kind

of mute but it did get better. now where are we? >> i don't feel like i was right. i feel like i was wrong. >> you do? you wanted an actual recession of back-to-back quarters of negative growth? >> i felt like bernanke has done a fantastic job of keeping this floating along. not great but floating along. >> you're saying that in a positive way that he did a fantastic job? we're not building some bubble somewhere? >> oh, no, we're building a bubble. looking back on it, hey, life's been good, less people unemployed and but we're building a bubble. >> was it the right move for him to keep us floating along or not? >> yes. i mean you always manage for the short term, but long-term we're all dead. >> but it took a long time for to you come out. i understand it's a nuanced question. there may be people talk about eggs being a four-letter word

and someday you have to full back. >> exactly and that point of time is getting closer and closer. is it five years away? is it six months away? can't be sure. but in fact it probably is closer than it is further. we have to face up to the reality of the fact. >> what's going to determine it? is it going to be inflation that pushes their hand, is it going to be the bond market that pushes their hand? >> maybe it's going to be politics. certainly we're going to screw things up and that's going to make things happen and it looks like it's inflation, but the fact of the matter is that the average american worker is doing so badly they're not creating the inflation. it's imported inflation coming from crude oil and oil prices. gold doesn't create inflation. >> maybe we're causing it with

our central bank here. >> we're causing it but it's coming from outside. it's not because we're getting paid more and doing great. >> nothing is imported anymore. >> i know. >> i guess, so how do you position -- what are you doing with $3 billion right now? >> you have to play this in the short term. go out the beta curve, trade. >> so do it, don't fight? >> go with the flow. the trick has got to be get relatively close to the edge of the cliff, okay things are good. >> because you're worried about the cliff. >> exactly. i wrote a thing called "fiscal cliffs" i look at china, europe, the u.s., we all look like we have a demand slowdown coming in 2013. >> make another recession call, john. are you making a note? >> don't do that, don't tell people there's going to be a

recession. but my arm is twitching. >> doesn't a 1% gdp feel like a recession? >> yes, what we always called stall speed and any twitch can cause the plane to go down. >> is that where we are right now? >> yes. >> we are? >> goldman sachs is really optimistic, they were looking for two but saying all their tracking are running more like 1.5, 1.7. those numbers are terrible. >> you wouldn't say junk bonds, you wouldn't say junk treasuries, or investment grade bonds. you'd say dividend stocks, stocks in general? >> dividend stocks. right now i'd go further out than dividend stocks and take some risks but the problem is how much money have you got, if you're mass mutual or fidelity, somebody really big you can't take your zillions and say i'm

going to reverse the boat in five minutes. you can't. if you have 3 billion it's not that much, i'll go out there and when it begins to look bad i'll get out in a hurray. >> you didn't pick a political party. you said we'll screw this up, doesn't matter who. >> they'll screw it up differently. if obama wins, we're going to go over the fiscal cliff because the republicans and obama aren't going to agree, we'll go out there and roll back the bush tax cuts, we're going to do this, have sequestered stuff or whatever and so that's going to hurt. >> how would he triangulate if he wins and they lose some of the house, say the democrats keep the senate, how would he triangulate to work with the other side? you don't think he'd let them go for another year or two? >> eventually he's going to have to, but he's going to get pushed into it and things are going to happen that are going to scare the heck out of us before we get there. >> what if romney, how does he

screw it up? >> if romney wins it will look like, the stock market is going to say this is great, go up for a little while and people are going to say wait a second, this is austerity. it's going to look like the uk, look like europe. >> because we're 25% of gdp, he's not going to let us stay there, right? >> exactly. >> you'd see many more cuts if he's in, is that good long-term? >> much better long-term. you could argue that's what we ought to do. what we ought to do is painful, but that's where eventually you have to go. europe is going that way already. japan went that way before. you can't have a part of tokyo real estate selling at price of the whole state of california. >> sam zell said you need to clear the system. sounds like you're not

empathetic and sounds cruel but we never really cleared the system in a lot of these markets and you need to clear it before it can come back and he feels i think the same way. >> he was talking about the real estate market. >> right but even housing and i think even letting gm go, clear that system, he meant even let the chips fall where they may in the financial sector. do you remember, the fdic, let it all clear. >> and theoretically if you look back in hitsry, that has to happen and it has happened, it happens by having a depression, it happens by the kings cutting the edge of the gold coins down or killing all the financiers so you don't have any money, that's the old time. >> it's right back then, you still do, walk out on the east river and fall through the ice when occupy wall street takes over. >> we have not had our recession

ye recession/depression yet? >> people that were unemployment had pain but not like this. >> what happens if president obama actually -- what happens if romney is elected and decides to go down the austerity program, slashing government spending, puts someone else in charge of the federal reserve and the person decides we need to get a lot the of the programs quickly. >> even if we stopped the programs then the economy looks bad and when i get worried it's late 2013 and we're in a recession, oh, we didn't mean to go here. what are we going to do and i'm wondering do the democrats come back and try inflation again? i would argue that inflation is probably the worst problem because the republicans are going to chicken out. >> and it lasts much longer. john, thanks. we're going to spend more time with you as soon as we can.

>> we're going to take a quick break. as we head to that break we'll talk about the rams disrupting the cardinals undefeated season in thursday night football. highlights in this weekend's key matchup are after this and still to come obama surrogate and maryland governor martin o'malley, he was in denver for the debate, heard both candidates take on job creation and the economy. he'll join us at the bottom of the hour. mike rowe here at a ford tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee... affording peace of mind to anyone who might be in the market for a new set of tires? your ford dealer. i'm beginning to sense a pattern. buy four select tires, get a $60 rebate. use the ford service credit credit card, get $60 more. that's up to $120. where did you get that sweater vest? your ford dealer.

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welcome back to "squawk box," everyone. in our headlines this morning, well, we are just an hour away from september employment reports. the number is the one investors have been waiting for all week. economists are expecting nonfarm payroll gains of 118,000 jobs and unemployment rate of 8.1%, according to a dow jones survey.

we have that number coming up and a lot riding on it today. sony is halting u.s. sales of its xperia tablet computer because of a manufacturing defect that could make them susceptible to water damage. it is going to fix the tablets already sold and does not expect a major impact on earnings. dave & busters is putting its public offering on hold. so they're putting it on the back burner. the arizona cardinals headed east to take on the st. louis rams in thursday night's nfl matchup their dreams of going 5-0 came to an abrupt halt. the rams dismannedling the cardinals 17-3, moving them to a 3-3 record, arizona falls 4-1, leaving houston and atlanta as the only unbeatens left in the league. notable games the philadelphia eagles taking on the pittsburgh steelers, one of the best quarterback rivalries returns,

peyton manning taking on tom brady in foxborough as the broncos battle the patriots and the nbc sunday night game, the saints and the chargers, despite a bad start for new orleans, a chance for history. drew brees could surpass johnny unias for the most touchdowns in a game, currently stands at 47 games. undefeated and nationally ranked rutgers versus uconn. >> totally shameless, the executive producer. i never have it in the prompter. and the reds are in the playoffs. >> lie, lie, lie, we have done it. that game kicks off at noon tomorrow. >> i hope chuck todd -- the idea that you would be promoing that game versus miami. >> right, we never talk about anything you care about solely. >> it's a husband and wife thing, the executive producer and you both went to -- >> will somebody shut his mike off, please? thank you very much.

>> can you read my lips? mitt romney picking up some needed momentum from his performance at the first presidential debate. president obama attempted to turn back some of that criticism by showing, taking a swing back at the gop challenger. listen to this. >> the man on stage last night, he does not want to be held accountable for the real mitt romney decisions and what he's been saying for the last year. governor romney may dance around his decisions but if you want to be president you owe the american people the truth. >> joining us from washington on the debate fallout is nbc's political director and chief white house correspondent chuck todd. you were there. you talked to a the lo of people afterwards. >> i did. >> what is your best guess what happened. this was a surprise to a lot of people watching in terms of president obama's performance. >> what had the biggest impact on me yesterday, i was at the denver rally, i traveled with him back from denver into

madison and obviously his base was enthusiastic, being out there to see him, and i interviewed all these folks asking what they thought of the debate and they were dumbfounded, they expressed disappointment, i don't understand, why didn't he fight back, why didn't he do this. that was what was so stunning. these were his supporters, these were people that stood in 45-degree weather in denver, and they were frustrated at the president, and wondering well he had all these lines now. where are they then? >> a day late. >> chuck, when i talk about the ryder cup and i think how could the americans do so bad, but you know what? there was another team, the european team and if you take away -- romney was good, right? it was tough. >> yes, he was prepared, he was good, he was on. >> it wasn't obama being bad. >> he was on his game. it's one you couldn't have just handed a victory.

it's not a case where both people did poorly and one did really badly. no, mitt romney was very good. he was crisp. his temperament was right. he had the whole, you know, when he'd hit him on health care he'd say obama care, mr. president, i hope you don't take that personally. he softened it. the whole debate from the get-go, even on the little line about the anniversary, you know. >> that was cute. >> where mitt romney with ann, it fell off the cough. his weakest moment was when he tried a zinger, had the planned line. everything else was unplanned. >> so many times, but not the facts. chuck, when is our next poll, and when will we see -- >> i would tell everybody the first polls to look at would be tuesday/wednesday. >> national polls? >> we're going back into the states, we're going back in florida, ohio and virginia, after that debate we had another plan, i said let's go back in

the three most important battleground states and see what's shifted and on any polling, what you want to do is let this settle in, and the first survey, no pollster likes a survey on friday and saturday, it's uneven because there are a lot of people that are watching real football games or some that somehow are watching rutgers and uconn. >> yeah, yeah, exactly. >> hey, chuck wore a red tie in honor of rutgers so there. >> did you even know who rutgers was playing, chuck? did you have any idea? >> should i just say it is a huge weekend in college football. i'm obsessed about mine but you've got florida/lsu, some big games. >> wants points. >> i'm a market guy like you. give me the line, what the market is saying. >> that's what you want. >> come on, it's the market. >> that will make it interesting. i might be watching the

giants/reds. that's on saturday night, too. >> i can't stand -- it's a 7:30 time on the wonderful network of nbc. >> any game except for the rutgers game, not insulted. >> ports, ny, channel 624 or -- >> i think it's on satellite radio. here comes the music. ♪ we have the jobs report coming up in less than an hour, a guest on earlier who said we needed to talk to you about what you saw in the last poll in terms of how people feel about the economy because we get these numbers, it's a good read, he was saying there was a serious break between democrats and republicans how they feel about the economy? >> there is. this jobs report and the next one are being totally viewed in political eyes, sort of people reacting so as they've come to their vote, what we've noticed in our polling is they almost answer questions through the prism of their vote so if

they're an obama person, the country is headed in the right direction, they're optimistic about this. if they're a romney person the country is headed in the wrong direction, they're not optimistic about the economy. the only number that got out of that bubble where we saw it wasn't just partisan was this idea is the economy in recovery, and that got to 57%. you can't get to 57% if you don't have actually folks that are on one side, you know, bleeding in and believing factually the economy is in recovery and factually the economy is in recovery. the argument now is of course should it be in a better recovery and i think even as you've had the romney campaign saying hey we're in recovery despite, that's been their new mantra. that's the one number that goes beyond the partisan liners. tony is right, on the direction of the country, on optimism on the economy in the next 12 months it is through the prism of their presidential vote that we're seeing people make, express their opinion on that.

>> you know, chuck, the big number you've told us, the big demographic is what happens with women. i guess that's going to be a tough question for romney because he just hasn't pulled very well. >> if it's a problem with the gender gap on that front, it's one-sided. he leads by men in single digits and loses women by double digits. it's a combination either he has to improve on women or he's got to expand the male demographic and he has to figure out how to exploit that. to me the measure of whether romney's making progress is going to be in the midwest, the three midwestern states, iowa, wisconsin, ohio, those are the three states where romney's been behind by more than five points in all three states, it's a place where it's the white working class male vote if you will that has been almost even there, that it's been almost a 1:1.

it can't be a 1:1. romney's got to win that by big, big margins to offset the gender issue, number one, but to just get over the top there, and that's been the disconnect, you know, the obama campaign's mantra in those three states has been to define romney as out of touch rich guy. did he fix that in the debate and did folks in those three states in particular say okay i'll give this guy a second look. >> 14 points. you knew that? >> are you talking about the gender gap? >> he's talking about the notre dame game. >> 14 points? you're getting 14 points? >> look at you. you don't want it now. >> sucker. >> suddenly getting nervous. this is the market. >> how about 13? >> the opening line was 13. i'll give thaw. >> okay, let's do 13. ohio state plays nebraska. >> it's a great weekend, georgia/south carolina,

florida/lsu. ♪ >> undefeated since '66, that was the t-shirts we had, '65 or '66. >> no wonder you're stuck, living in the past when you were like 2 years old in miami. >> chuck is this the more important jobs number or the next one, a few days before people go to the polling booths? >> this one because we'll have had half of the country voted by the next one so this one. we're still only in the single digits percentage wise of people that have actually voted. >> chuck, thank you, see you later. >> tomorrow night, it's going to be great. see you. up next, market musings. what did he do? >> he just -- nevermind. >> oh the miami. >> miami. >> well you're wearing black for the scarlet knights. >> new uniforms, they're wearing all black uniforms, the new deal they cut. ♪

so all black tomorrow. big blackout, everybody is supposed to wear black. >> and did you it here. >> yes. >> we'll be back with more from john taylor. tdd#: 1-800-345-2550 when i'm trading, i'm totally focused. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 gives me tools that help me find opportunities more easily. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime... tdd#: 1-800-345-2550 until i choose to focus on something else. tdd#: 1-800-345-2550 trade at charles schwab for $8.95 a trade. tdd#: 1-800-345-2550 open an account and trade up to

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check out, at the top of the hour our countdown to the jobs report, investors say it's the most important number before the election. we'll welcome economist joel meyer and mark zandi, and two more former council of economic advisers chairs, the guys that make the theoretical guys, okay, not the policy guys. >> right. >> the theoretical guys that serve presidents, austan goolsbee for obama and ed lazear served under president bush and the other guys more marketing, pr type guys. >> guys who know the numbers and details. >> who was the guy -- all right. >> let's get back to the markets with our guest host, john taylor of fx concepts. for anybody who wasn't watching before you laid out a scenario where you said it doesn't matter who wins because either side politically will mess things up

when it comes to the economy and you're going to be looking at a very difficult situation no matter what. that's a little different that what roger altman has written about, wrote an op. ed, no matter who wins they're looking at a brighter side in terms of the economy. >> it's hard to see where the demand is coming from where job growth is so weak and republicans are talking about trying to, you know, bring the government deficit down, trying to straighten out the economy in the long run. so i don't see final demand so things might be better four years from now and therefore the president will look very good in hindsight, but it's going to be a hell of a ride getting there. >> you say might look better four years from now. >> i don't know. are they going to do a good job? it's hard to do a good job. i would argue obama did a good

job because the situation was so awful where he started out. looking with hindsight you could have done better than you did. >> what do you think has to happen most? you worry about some of the austerity but you think we need to flush the system and deal with bitter medicine? >> well, one thing, the really good things about the united states, you got to be much more positive about this country than europe or japan. one, because we've got more people here, we're growing, we have babies, we have growing population so the housing problem will disappear. all of the houses are going to get used. i would argue we've already gone through the low in the housing cycle so that's going to be better, so in five, seven years from now we're going to be building a lot more houses which means a lot more workers are going to be building them and you know, whirlpool will be making equipment to go in those houses so things will look good over time but it depends on how the government can manage this.

>> no matter who is in you'll not see gdp 25% spent on government spending no matter who gets in, you have to cut it. >> france has 58% spent, i'm not saying that's good but the government could grow to be a lot more than 25, we're only talking about the federal, you're not talking about the states and locals there. we're more in the high 30s. the government could be bigger but we have to tax people in order to have the government bigger. what do you want a smaller government? we have to balance this thing out. >> everything i here is you have to tax more just to pay off our deficit. you have to cut spending and look at the federal reserve running out of things it can continue to do. >> you don't have to pay off the deficit. nobody's ever paid off the deficit or gone -- the policy of paying off the deficit doesn't work. we pay off the deficit because you like clinton, make the

economy grow so much, somehow money falls from heaven and the deficit goes away but they certainly didn't start off with a policy i'm going to pay off the deficit. nobody ever said that. >> do you think there's any scenario that someone gets elected, they do some things that make us get back to 3 to 3.5% growth which makes this a whole different picture? >> there must be a scenario. i can't lay it out but there are a lot of things that can happen. in the u.s. the dollar is low and that's a critical input. if you look at where growth has got to come from, it's got to come from consumption, got to come from government spending or investment or exports. nothing else. there's nothing else there. >> the rest of the globe is slowing down. how do you get exports going in. >> the dollar goes down. >> people say the euro is overvalued now. you think the euro is overvalued now. >> yes. >> it helps us if it's overvalued. >> it does help you. >> what would it take to you go

long in the euro, have to win the lottery? what would it take? there's no scenario which you'd go long in euro. >> and the euro is not one critter anymore. it ought to be a northern euro and southern euro. the northern euro, god, i'd love to own that but that's germany, holland, finland, places like that. so that's good but the other ones, the euro if you're just looking at the other euro ought to be around 0.8 against the dollar. >> really? we'd never export another anything. >> so where? >> anywhere. >> we export at 0.8 on the euro? >> they're not going to buy anything. they don't have any money. what are you going to buy from southern europe? we all buy clothes from italy, but mostly we don't buy things from people. how many greek things do you see in the store. >> we go there. >> nice place for vacation, the

caribbean is nice, too. >> you're right. >> it would be nice and if greece really wants to get out of its problems it ought to get the heck out of the euro and ought to allow people to build hotels. there are no hotels in greece that are chain hotels because they won't allow them. >> unions or something? >> there's a national law whatever. >> that is stupid. you're right. >> that other hotel owners have to allow a new hotel to be built. they're old and they've been there for years. you can't build a hotel there unless you kiss a lot of feet and do a lot of whatever. >> that is wrong. >> john is our guest host today. we'll have more insights from him as we continue, john taylor. joe has stocks to watch ahead of this, the open on wall street and september jobs report. "squawk" will be back after this. do you like "squawk box"?

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♪

playing that for chuck todd, notre dame fight song, notre dame plays miami. we'll do that the animal orchestra, pick a game and a fight song from one or the other and if they win in the end it will become an indicator for who you should bet on. >> i like it. >> i don't know, 14 points. >> you took 13. >> i gave 13. >> you gave 13 but you took 13 over 14. >> zynga cutting its full-year outlook. the sentiment has already been hurt by a number of executive departures, current quarter is called challenging by the company, poorer than expected performance for certain games and facebook is also indicated lower. i think it closed at like almost 22, so that's showing the premarket move there, it's down not a lot but over 2%, zynga provides the most popular

facebook games and gets a chunk of revenue from zynga. hewlett-packard has been downgraded to neutral from, to neutral from buy at stern ag, pay close attention to the analyst. he probably went to a buy and ooh, there's a five-year. maybe a ten-year was when he -- he's had a buy, and now it's a neutral. i was going to try and go back far enough to where it was lower and went up for a while. >> show the one week. >> maybe went to a buy, yeah, maybe he went to -- >> i don't think so. >> maybe he went to a buy back in, where would you have to go? >> '04. >> back in '04, i don't know. anyway if you want to listen to this person he says the headwinds faced by the company are likely secular and structural in nature, and further downside, surprises are

possible even after it hit a 9.5 year low. coming up, the number that matters most to your money and quite a bit to the election in november, the jobs report for september, will the unemployment rate drop below 8%? will it drop below 7%? keep it here and find out. future as head of the numbers this morning, up 31 points. they've gotten a little better. we'll be right back.

♪ i've never met a girl who made me feel the way that you do ♪ ♪ you're all right ♪ whenever i'm asked to make my dream, i tell them you do ♪ ♪ you're out of sight

i've been living out of hotels to are a month. >> welcome back to "squawk box." i'm becky quick along with joe kernen. andrew ross sorkin is off today. >> hey, beck. >> our guest host is squawk market master john taylor, chairman of fx concepts. if i don't say that i knew that i wasn't becky quick, like "the new york post" will say -- >> you're aquaman. >> i saw it, i read it on purpose. we've been counting up and down in 8:30 eastern and september employment report, you are looking at a live shot of the official labor department clock, 8: 8:01.32, matches the one we're looking at. >> ours is a second faster. they don't let anybody talk there until their clock says so it doesn't matter what our clock

says. >> economists is you are veighed by dow jones expect the unemployment to hold steady at.1, looking for jobs, non-farm payrolls up 118, and then seen some others above that, some down to 110, 111, mark zandi and michelle meyer will join us with more on what to expect from the report and after that an economist battle royale, it says here, austan goolsbee and ed lazear will go head to head. austan goolsbee was head of president obama's economic advisers and ed lazear former economic adviser to president jor george w. bush. morgan stanley is planning to cut more jobs and slash bonuseses. james gorman tells "the financial times" those are the

sacrifices necessary to boost profits and shareholder value. he's sympathetic to the view that this industry is still overpaid. samsung is reporting quarterly profit a record $7.3 billion, nearly double last year's figure. analysts expect the current quarter to be difficult as samsung spends more on marketing as it escalates its fight with apple. and dozens of lawsuits have been filed against facebook, the nasdaq and various ipo underwriters and they're going to be centralized today before a federal judge in new york. facebook requested the transfer. investors argue they lost money due to nasdaq technical glitches, they accused facebook of selectively disclosing on flattering information about its business prospects to analysts who shared that privilege with certain select investors. let's get a check on markets this morning, u.s. equity futures have improved, this is a more exciting not ominous thing we're looking up here, up about 30 points, 29.64, overseas in

asia, we saw a lot of green with ross and more green in asia, although in india that's not the case. european equities this morning are good, up about anywhere between 0.5 and 1 percentage point. >> the job report is important for the markets and also for the election. we've been trying to figure out what it would mean if it's higher than, lower than the numbers that are expected coming in. chuck todd poents out that this is probably the most important number, even though we get another number that comes just days before people head to the election booths. he says that by that point a lot of people will have already taken in with the early voting so this is going to be the last number. >> early voters would look at this number. >> in fact some of them, october 2nd is when it really started. i was surprised, half of the people already voting? in any event this number is probably going to be the most important number as we head into the election, so this is the

day. wall street is watching, main street is watching. >> i wonder if that would hold true for the debates, too. >> that this was the most important? >> right, because the people will have voted by the time we see the next one is two weeks. >> right. there's a vice presidential one next week on thursday, the next presidential one is two weeks. >> i don't know if people vote based on vice presidents though. >> you might argue people did last time around. >> right, well this time the democratic version of -- anyway. more and more states obviously have been facing the challenge of trying to raise revenue while keeping jobs from moving out of the state. joining us is democratic governor martin o'malley, supporter of president obama and governor thank you for joining us today. ♪ thomas o'malley, o'malley >> have you seen "the

aristocats,"? >> yes. no relation but my father's name was thomas o'malley. >> he must have gotten that all the time, the late great phil harris, "aristocats" great movie. >> he got it all the time from six kids singing it at him. >> i knew that. thanks for playing along. >> governor, we're watching this jobs number coming up today and this is something as the head of a state you play close attention to. >> absolutely. >> what's your sense of where we stand as a nation in terms of the jobs picture? >> we are fighting back from the worst job losses that we've seen since the great depression. the good news is for 30 months in a row our nation's been creating more jobs every month than we've been losing, and most of that job growth, the vast majority of it has been in the private sector, so we are clearly moving forward. we could be moving forward a lot more quickly, and i think we will, after this election, and a better congress. i think there was a political

calculation when the republicans tea party congress took power that if they could slow the job growth before the election, they could hurt the president's re-election. >> you think there's people who want fewer jobs just for political gain? >> i do. if you look at the several jobs bills that the president has sent to the hill, republican party voted absolutely against him. when i say absolutely i mean every single time they came up, each and every member of their party voted against the jobs bill. when fdr brought us back from the job losses of the great depression, it was not by one act. it was job initiative after job initiative and that's what we need to continue to do as a country. what we've actually seen and the numbers will bear this out is while the private sector has been coming back with greater job growth, we've seen the public sector actually dragging that rate of job growth down. so we need a balanced approach. we need to make sure we're not

eliminating public sector jobs at the same time we're creating them in the private sector. last year our state ranked ninth in terms of rate of job growth but we want all of the states doing better and you can't do that if you're eliminating as many public sector jobs as we create in the private sector. >> as a governor you have a tougher job a lot of people argue than people in federal government because you have to face this idea of balancing a budget and making sure you are bringing in revenue to pay for everything that you are spending. you've tried a couple of different things, a tax on million narz that expired at the end of last year or this year. now ir'switching tack and raises taxes on anybody who makes anything over $100,000. >> i'm not sure -- well let me say this. we have in fact the third lowest rate, i mean third lowest state and local tax burden of any of

the 50 states in america as a percentage of income. we have the highest median income in the country and so we believe in a balanced approach. we have a aaa bond rating and we did put in place, i wouldn't call it a tax on millionaires as much as i refer to it as a progressive income tax and in our state those who make more pay a slightly higher rate than lower earners pay, but we have a rate of job creation that is better than most states. we have in our science and technology sector, very strong sector growing, life science, biotech, i.t., professional services, health care with johns hopkins and others. >> governor? >> yes, sir. >> we had already, when the president proposed the american jobs act, we had already been over letting the bush tax cuts expire just for the rich, and

keeping them for people less than 250. we had already had that argument three or four times and it was clear from the composition of congress at the time that the president put forth the american jobs act that there was no way that was going to happen. so letting it, where that was going to be a provision in the american jobs act was pure political posturing and in no way, he knew there was no way that that was going to pass. i just take issue with you saying that this was all republicans saying that they weren't going to, they were going to make sure the jobless rate was much higher. he knew full well that he could back them into the obstructionist corner by saying that we're definitely going to do that, making that part of the american jobs act, right? >> well, wait a minute. >> he did it. that's the way he did it. >> no, no, excuse me, who backed who into the obstructionist jobs corner? >> you think there was a chance that the republicans in the house were going to go along with that, letting the bush tax cuts expire on the rich but not on -- did you think they were going to go along with that?

>> yes. it's called appealing to the common good and if, as you have concluded that they will never go along with a jobs initiative -- >> after 2010 they weren't going to, after that election they weren't going to. maybe after 2012 but not the composition of congress we had at the time. he knew full well it wasn't going to work and the jobs bill languished. i would have left that out. >> what would you expect a good president to do, stop trying? >> not stop trying but i would have structured a bill he could have worked with the other side to get through. >> there is no bill like that because they're trying to slow the economy before the election. >> might have helped with health care to work with the other side a little, too. >> hey, if the president has, the president has shown his willingness to compromise sometimes to much greater degrees than some would deem is proven but you can't stop trying. he put up five different jobs bills. each one of those jobs bills not wanting to add to the deficit, he said you know what? we should have millionaires

return to the same fair rates they were paying under president clinton. >> i think it's still possible some on the other side are voting principle in terms of not going along with certain provisions. >> oh, come on. >> they wanted to make sure there were more people were out of work, every one of them. >> they want to slow the economy before the election and if you don't believe that -- >> that was a year and a half ago. >> i have a bridge i want to sell you in brooklyn. that is what the republican obstructionists in congress have been about. >> some would say they were spawned in 2010 by the way health care was handled, you almost created the tea party. >> you can create excuses for these guys if you want to, but the fact of the matter is, every single jobs bill the republicans in congress have voted against. do you want to create -- >> they passed one. >> name it. i forgot which one. >> the one with the payroll tax extension. the unemployment claim extens n extension. >> well, that's one and you no what he? if they were batting in the major leagues they'd be off the team right quick. we need to put job creation

first. >> we all agree with that. we don't want to talk about the pipeline or the nlrb then, that's for sure. >> we can talk about any number of things including the fact that domestic energy production is way up under president obama. >> we heard about that in the debate in spite of instead of because of. >> not in spite of. the fact of the matter is president obama has reduced our dependence on foreign oil over these last few years, we've seen jobs created in the solar industry, in green industries. our state ranks fourth among the 50 states in terms of the number of jobs in the green sector so there are things we can and must do in order to make this recovery happen more quickly. but the fact of the matter is, not since 2005 have we had 30 months in a row of private sector job growth. we're seeing our housing industry coming back, with housing values rising in maryland, seven consecutive months on a year over year basis. so there are a lot of things we can do as a country, if we put

job creation first, and that's what president obama has been doing, even in the face of obstructionists who are trying to slow the jobs recovery before the election. >> governor? >> that dog is trying its best to catch up with the fire truck but we keep moving forward. >> governor, i want to thank you very much for your time today. >> thank you. >> governor o'malley again from maryland. coming up, we are counting up -- counting down to 8:30 a.m., september employment report, our jobs panel members are making their way to the "squawk" set, mark zandi, moody's analytics and michelle meyer of b of a merrill lynch global research. we'll get their predictions, next.

welcome back, everybody. it's jobs friday and we are a few minutes away from the release of the september jobs report. joining us is michelle meyers, and mark zandi. and of course john taylor is our guest host from fx concepts. mark, why don't you give us your number, what you're expecting. >> a expect a gain of about 110,000. >> right in line with consensus. >> yes. >> and employment number? >> it is a little low.

i'm a slave of the data, joe, the data says one thing, i go with it. >> you're always more optimistic. >> filly fed, the jobs component there? >> the ism surveys have all been negative, we have our own business confidence survey. >> you even try to do participate rate and unemployment rates? >> to predict them in. >> yes. >> i predict everything. >> you're fearless. >> the decline last month was very weird so i think we'll go back up to 8.2%, so that's a job market that's improving but very slowly for me. one other quick point before you go to michelle, i don't want to hog too much time but we did get employment revisions, joe, big ones. >> you mean for the year? the 400,000 in. >> yeah, 400,000. >> so the numbers you've been

talking about, 150 to 2. >> that's closer to reality. >> how frustrating people don't pay a whole lot of attention. it's the real number but -- >> came out to 20,000 a month. >> that's a big difference. if i told you 130 or 150, you know. right. >> michelle, how about you? >> we're a little bit more pessimistic, 90,000 for job growth and think the unemployment rate will increase to 8.2% also. we've had a bullish consensus call, the economy is on a slow footing, we're worried about the uncertainty shock as a result of the fiscal cliff and i think if you look more broadly at businesses right now, you're certainly seeing a contraction in investment, and a hit to confidence. you see it in capex and durable goods orders. the request he is how that ends up translating to labor if business also cut back on labor as much as they cut back on capital and we think we won't see an outright contraction in jobs but certainly see some slow

job growth. >> john, you're nodding your head. you agree with what michelle was just saying? >> kcapex and things like that don't look good. >> the shortfall in jobs is the hiring. if you look at -- >> hiring slowed down. >> it's not layoffs, it's the hiring. if you look at the hiring rates across industry, first thing that comes that's obvious is across all industries so that would be consistent with michelle's view the uncertainty that's pervading across the economy but the other thing you notice is a lot of it is construction, housing, and so when that comes back. >> there's a lag between investment and housing, and actual construction jobs so housing investment and construction is termed but there's still spare capacity in the employment and construction employment which is why you're not seeing hiring yet, you're just seeing the current workers working more hours. >> michelle, mark and john are going to be with us as they wait for the number, they'll help us

break it down in a moment. >> what's coming up? ♪ i had no idea. a possible merger of well-known tv franchises, we're going to bring you that story next. i'm trying to, looks like "american idol." the wait is almost over, the actual number, it's not an atomic clock. 8:21.07, so we got about eight minutes and change, our panel will break down the data. who is doing it for us today? hampton? >> i think so. >> we'll have an economic showdown, a person that looks like mark zandi but less hair, austan goolsbee, and ed lazear will debate the political impact of the jobs numbers, all just a few minutes away, better looking. [ male announcer ] for the saver, and a big first step.

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welcome back to "squawk box" everyone. two well-known reality television franchises may be coming together. apollo global management, the parent of "american idol" and owner corps media group wants to merge with the producer of "big brother" as well as "deal or no deal." apollo owns one-third of endomol. when we come back the september report a few minutes away, final predictions from our panel of experts and bring you the numbers and the market reaction, right now as we head to a break, take a look at the u.s. equity

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♪ welcome back to "squawk box," we're a few minutes away from the september employment report. let's get to some final predictions from our panel of experts, mark zandi, michelle meyer, john taylor, steve liesman, rick santelli. john, you said no matter what happens the market goes up even if it's a disappointing number. >> yes. >> why is that? >> if it's a disappointing number romney wins the election. >> you think it's a knee-jerk reaction. rick, we have not heard from you this morning. what are you thinking and feeling down there? what's the mood? because we've heard from a lot of people this is the most important number before the election. >> i don't think it is. i think that makes the general public look silly. one number isn't going to change the election. i think it will continue --

>> chuck todd told us half the people have already voted. >> well i'm going 79,000 and 7.9, if anybody's interested. >> oh, wow. >> interesting. >> 79 is wild. >> rick, my number was the participation rate goals to 42% and the unemployment rate comes in at 5.9. >> oh, come on, joe, i would say bring it down to about 39% and get it down to 3%. yeah, i agree. i wonder if there's a room where people are scratching of their head trying to do that utility function. >> steve, do you have a number you're looking? >> do i have a number? >> yeah. >> i do. >> which is? >> you do your work. >> i'm right in at 140 which is the exact average of the past, it's the year-to-date average and it's not a bold prediction. i think it feels like a 140 economy, and if it comes in below that or above that, i'm not going to be persuaded that the number is actually above or

below, and one quick thing, i don't think you can tell people what the jobs situation is in their lives. they know. >> they know it themselves. >> i'll have data on the back side of this. >> we are a few seconds away from the september employment report. this is the number we've been waiting for. hampt hampt hampton pearson is up. >> up by 114,000 jobs, 7.8 % is the new unemployment rate. september jobs the consensus forecast the number is right in line but the downward decline of 0.3% in the unemployment rate a big surprise, private sector jobs increased by 140,004,000. significant revisions to the july and august report, the combined increase is now 86,000 for those two months over what had been previously reported as far as job growth. back to how did we get to 7.8% unemployment? total employment from the household survey increased by

873,000 jobs last month, the highest one-month jump since june of 1983. job gains overall, health care, plus 44,000, transportation up 17,000, financial services up 13,000, the biggest decline last month manufacturing down by 16,000. the number of unemployed persons declined by 456,000 to 12.1 million, those out of work six months or longer 4.8 million or about 40.1%. back to you. >> hampton, thank you. the headline has to be 7.8% for the unemployment rate. >> now below when president obama took office. >> yeah. >> it didn't go back to where it was. it started at 7.9, 44 months above eight -- >> why was he so unprepared for the debate. you'd think they'd spend more time preparing for the debate

than massaging the job numbers. can i give you content on how that happened? can we say wtf on tv? is that okay? this is an amazing thing. here's what happened, just the background on this is the household survey has been lagging for a while, mark, it's been curious. >> down. >> this is the volatile, there's two surveys out there, the one where they call 50,000 people up and do it by phone and the establishment survey where they get reports of jobs. this is from the phone survey, so it's very volatile, okay? workforce went up by 418,000 so the participation, okay, the employed went up by -- >> say that again? >> workforce rose by 418 so i don't have the participation rate in front of me, it had to have risen. >> rick, we're going to find out -- >> let me get the data first and then you can spin it. >> why did the bad debate performance mean they help the numbers. >> if they were so good at what they did they would prepare the numbers. >> i'm not saying one word. i'm not saying a word. >> you're saying -- >> that's a great sargment

steve. >> i told you they'd get it under 8%. they did. let america decide. >> can i just give the data and we can talk about the conspiracy. the number of employed in the household survey went up by 873,000. it's got to be the biggest month ever. >> what is the participation rate? >> i'll get you that, rick, can i just give the top line stuff. >> oh, yeah. give the fudge before you give the brownie. >> the number of unemployed fell by 450,000. the u6, rick, unchanged at 14.7%. i'm not sure why that is but you did have a 200,000 or so drop in the number of unemployed for 27 weeks or more. now take it away. i just wanted to tell you how we had -- >> all the numbers ever pretty good, they revised up august. >> i got my 140 out of it, i have to calculate it. >> and up 0.3% hourly earnings. >> yes, hourly earnings. >> it would have to be a grand conspiracy earnings.

>> because the household number was so funneled? >> so fudged? >> some of the things i was looking up before you could see a different number this time around because of the seasonal effect of hiring for holiday workers and things, is that part of any of this? >> the numbers are volatile and we've had big revisions, we've had seasonality issues but overall, taking into account the many different components this was a good report. the unemployment rate fell for good reasons because there were actually more jobs added. >> right. >> household survey is volatile of course but i would say on balance it's a positive. >> in my mind's eye we've created 4.7, maybe 4.8 million jobs with the revisions since job growth resumed two and a half years ago so that's well over half the jobs lost that we lost during the recession, and private sector jobs, we probably must be well over 5 million, must be close to 5.25, 5.3 million. in the grand historical scheme of things that's not too bad. >> here is something you can

chew on a little bit, mark, the last three months, three months, september, august -- july, september and august they revised government employment to a positive. it was a negative in the first, in july, a negative in the first print in august and positive this month, so we've done 18, 45 and 10. hmm. so it looks like they've kind of gotten maybe to the end of the cycle here and they're revising what's happened. >> what did you just say? say that again. i'm trying to keep up. they've revised the last three numbers? >> they revised the government employment. >> for the last for july, august, september. >> it was negative in the prior two months, now it's printing positive. >> oh, government jobs, not private sector jobs. >> also printed positive in september, so that's, i guess an easy way to kind of perpetrate this conspiracy is you would then go and add government workers. >> rick, why did, i mean you said 7.9, so you miscalculated. didn't you think it would be better to be below the rate

where he actually started than, why would you say 7.9, why didn't you go to 7.8? >> i think the rate has to be under 8% in my opinion. >> so under 8 but this is better because now it's actually come down over the last year. >> i try to be objective. the job creation on the headline at 114,000 does auger a higher, there was a higher labor force participation. >> 63.6, went up. >> that's real. the household survey and all of that, i know we can bait and switch and i know everybody at that table has no ideological lean at all, but in the end, it's apples and oranges. >> just like you, rick. >> household establishment, household establishment, you know what? all's i know is that i'm not that good to call it last month to be under 8%. >> let's be clear, mark, does all this huge pop in the household survey bring it in line with the unemployment

survey, with the payroll? >> it's higher. >> it's higher now. >> over the past year the payroll survey not including these numbers is about 150k per month. the household survey was 200k per month but what's key here is that the household survey tends to lead the payroll survey coming out of recession into recovery so this augers well for the future. >> john, how does this play into your scenario, worry being slow growth, worried about what's around the corner, worried whoever wins in november inherits? >> one of the problems, this is a lagging indicator for everything, employment, so therefore -- >> it's a coincident measure, not a lagging indicator. >> i'll give you that, but it doesn't tell me anything about the future so i'm more worried about what the government is going to do in the fiscal cliff and those kinds of things than i am and i'm also worried if romney wins the election he's

going to slow things down, and i think that's bad. >> obama or romney? >> romney. >> romney is going to slow things down. can i add to what you said, john, is it also true the on sense of job growth could make you pessimistic about the future in that you don't have the support for the recovery you would expect? i agree higher job growth is not necessarily an omen of better economic growth but in the absence, mark and michelle also, this is what? let answer not get excited. it's 114 on the payroll and say it's revised up next month, revisions hold to 150. it's still a 1.5, 2% economy. we're not making huge inroads here. >> it's still a challenging environment and i think what's encourage something we're making slow progress but by no means are we accelerating to a much different business cycle. the fundamental challenges that the economy faces are still there. you still have the fiscal cliff at the end of the year which is

going to be a concern. you still have credit conditions that haven't returned to a normal environment. you still have concern over the synchronized global slowdown so steve, i think it's important to put the number into perspective but at the same time, it is showing a bit better news than we would have thought. >> here's a perspective. you can look it up and down and all around but cutting through the data, we're at least 150k per month which is not too bad and i'm not sure gdp is right. this would not be consistent. >> if you showed me 2.5 or 3% growth i'd be excited doing 250s and 300s, that's high, but doing 200s on jobs. we're not doing the growth so i don't expect the jobs. >> the official gdp number is 3.5 to 2 or somewhere in between there. this doesn't feel like a 1.5 to 2% economy. i say it's 2, 2.5, maybe higher. >> depends on productivity, too, that's what's caused this differential between the job numbers and gdp that you had --

>> the current gap between jobs and gdp suggests essentially very little productivity, which would be unusual that it would be this weak. >> what are your tracking numbers showing for the economy, if you don't trust the gdp numbers you got to have your own system or whatever that's kind of -- >> i track the gdp numbers and it's tracking in the just ended q3 at 1.9. >> that's q2, you know, that's what i see all around is it's under 2. >> i'm going to be when i come back at 10:00 i'll be looking at the difference between the house hold and employment surveys and where they are and what they're telling us about the future. >> what did hours worked do? >> give me a second, i need to get there, hours worked average weekly hours up a tenth. >> that's a lot. this is a really big report. this is a big report. >> guys, thank you all very much, steve, see you back in a little bit, rick, see you in a little bit. michelle and mark thank you for coming in. john will be with us for the rest of the show. come up next the political implications of the jobs report,

guys who use advise presidents, austan goolsbee chairman of the council of economic advisers under president obama and ed lazear chair under president george w. bush. ♪ reach one customer at a time? ♪ or help doctors turn billions of bytes of shared information... ♪ into a fifth anniversary of remission? ♪ whatever your business challenge, dell has the technology and services to help you solve it.

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geico, see how much you could save. let's get more reaction to the numbers, joining us two former chairmen of the white house council of economic advisers, ed lazear advised president george w. bush and austan goolsbee, former adviser to president barack obama. you know, our friend liesman, austan, he said if they could

fix these numbers, if they could somehow fix them, then why didn't they fix the debate performance? that didn't make sense to me. i think i figured it out. you could relax at the debate if you knew you were doing 7.8, all right? you could kind of mail it in, like hey, no big deal. i'm getting a 7.8 on friday. >> look, first of all, i've been saying for months, you've made me be mr. pessimistic on the jobs panel month after month and i told you finally the seasonal adjustment would kick in, in our favor, starting in september and then you didn't have me on! i would have predicted this. you got to at least -- >> i didn't know i could make you do things. that's cool, what do i want to you do. >> no, you made me do nothing. you kicked me off of there. >> where were you last month? >> it wasn't for lack of asking, was it? >> i'm sure we probably begged. >> no, i'm just playing with

you. you got to learn the name of the bls commissioner before you can accuse anybody of conspiracy, we established that. >> eddie lazear, ed never, you know, we try to get him to be partisan, he's too nice. tell us what about these numbers, though, everybody looked at the real details of the report and said this is a really good report even though it's still at 114 or whatever but there are some revisions i guess. >> i'll say the same thing that i always said when i was at the white house, and actually i always heard austan say as well which is you want to look at a more general series of numbers rather than just one month and actually this one month is nothing to write home about, 114,000 isn't even treading water so it's all right, and it seems consistent with what we've seen. remember the household numbers were down and down pretty dramatically over the past couple of months so this tends to make up for it. my view is that we're pretty much kind of where we've been. the average is about 125,000,

140,000, something like that, so we're about read treading water. the labor market hasn't looked up. i'm kind of a wonk on this, i like these joltz numbers but i look at the monthly hires, the best way to get a sense of whether the economy is growing and if you look back four years ago, we were hiring 4.2 million a month. today we're hiring 4.2 million a month so that number has got to grow before we're going to see the labor market turn around. you know, we did have a little bit of a wind at our backs at the beginning of the year, had about 250,000 per month and looked like things were going to pick up and unfortunately that wasn't sustained. >> austan, i misunderstood, you were asking about john galvin at the bls? >> now all of a sudden you're the expert on bls. >> i loved him on "psycho"no,

john gavin, a different guy. >> a different guy. you want to take multiple months an average, far accurate than any one month. if you look at the last few months it's been okay. we should take some heart in that the numbers are improving but they're not improving fast enough. they need to be a lot better. if you look around the world, i think one of the things to note is, we're not growing that fast, and we're one of the fastest growing of all the advanced countries. this is a pretty tough spot that the entire advanced economic world is in especially in europe, and so that's just a big wait that we're trying to get off. we're making slow progress but it's got to be faster. >> explain -- >> i would agree. >> go ahead. >> i'm sorry, i was going to say i agree with austan on that. people talk about is this a problem in the labor market, is this a jobless recovery? that's not what's going on. if you look at our growth rate since the end of the recession we've had about 6.5% growth

since that time, and the job growth is almost right on where we should be, given the historical numbers. we've had about 3% job growth, 6% economic growth, so the problem is not that the labor market is out of whack. the pain is felt in the labor market but i think austan's right. the problem is that we are not growing. the world is not growing very rapidly and until we get the economy growing, we're not going to see a lot of improvement in the labor market. >> john? >> absolutely. the problem is that the rest of the world is doing poorly and how can we grow? consumption is going along with the job growth, export market is deteriorating now because europe is deteriorating. >> wow. i listen to all of this and again i feel sorry for ben bernanke because it's all on his shoulders still or at least he thinks it still is. austan, or ed, we never talked about you to the latest move in

wre thr qe3. thumbs up or thumbs down. i know that's going to happen. >> jump ball. >> a is before e. all right, austan, quickly, what do you think? >> look, i think he's doing what he should be doing, but the effectiveness of qe3 is going to be less than 2 and less than 1 and less than a twist. >> we're going to lose your window. ed, you like it or not? >> i second what austan said. i think that it's just not a particularly powerful policy at this point. >> all right, great, gentlemen, thank you, we're losing your window. this is tv talk, a satellite thing. thanks, guys. when we come back we have the street's reaction to the jobs number, we will check in with jim cramer at the n xwrrys. and avon is up on the news andrea jung will be stepping down from the board at the end of the year, she was replaced as ceo in april.

fred hassan will be avon's nonexecutive chairman. monday, facebook and "squawk box" collide. keep in touch with joe, becky and

welcome back to "squawk box." let's get down to the new york stock exchange. jim kramer and david faber join us now. faber, you and cramer, we had this facebook/squawk box, have you looked at that, cramer or faber. >> >> i saw some yesterday on it. they're putting up a bunch of taped of squawk shows and this was us in philadelphia and first we interviewed the guy with the street.com shirt. i said what is this? "the stack" and and then they interviewed some guy in the crowd and they said his last name's cramer and it was your dad. i mean, you had more plants. >> october 3, 1998, my father was on squawk next to the liberty bell. >> yea. >> this was before you were an icon with "mad money," but you were working it then. you had people in the audience.

>> 1898. >> the federal reserve called -- five days later the federal reserve called an emergency meeting and cut rates after october 3rd when he said he was going to raise rates. >> ltcm. >> you have an incredible memory. >> yes, we were. >> people seemed to think we would see a similar move before this year ends. i don't know if that's true. >> i had a head of hair that would blow your mind. >> if anyone else wants to see that that will be on squawk. >> nemo's not helping facebook. >> that's amazing. what game are not -- >> how does that work? they get charged on half of the acquisitions. people stopped playing on gpop. i know i am. i was playing with everybody and that was the end. >> i don't know what gpop is. >> and they're not helping the employment number. zynga. >> how was larue, texas?

>> it was beautiful. >> you ever been to a flyover state before? have you ever touched down and gotten off the plane? >> i've been in texas every year for the last three years. we shoot guns and blow stuff up. there are things exploding all of the time. they blew up a bomb that shook the house so much that one of the deer heads fell and almost killed one of the guests. >> all right. >> there's a good texas story. >> it's texas. >> guns and religion. thanks, guys. we'll see you in a couple of minutes. >> when we come back we'll have more from the guest host, squawk market taylor, jack welch tweeted that maybe this number's been played with. >> those chicago guys will do anything. >> by the way, don't miss "squawk box" on monday and we'll be talking with carly fiorina former chairman and ceo of hp.

final thoughts from our guest host john taylor of fs concepts. we were just talking about this tweet from jack welch. he tweeted, unbelievable numbers.

the chicago guys will do everything. can't debate the numbers. it is lighting up the tweet sphere. >> there was a huge 873,000 increase in the household survey exceeding the 418 in the labor force. a lot of these numbers, is there wiggle room? there's assumptions, right? >> there's a lot of wiggle room. they're calling up people on the phone. who knows who answers the phone? nowadays you have cell phones and you're not going to answer the phone at home. my phone won't be answered because you'll say that's some weird person polling me. >> although some would say how come it goes and not above. that is volatile. >> because of that, don't trust the number like that. steve had the right answer. he was averaging on ten months and now it was his forecast that was easy. >> and to be honest with you, if i was going to manipulate them